Sen. Cory Booker Demands Fair Financing For Women-Owned Businesses
While the number of women-owned small businesses in America is on the rise, there's plenty of data to keep female entrepreneurs from celebrating just yet: the number of small businesses created by women and people of color is not only below average, it is significantly lower than the number owned by white men. According to the Center for American Progress (CAP), that gap doesn't go away even if researchers account for disparities in income, wealth, and education. Senators Cory Booker, D- New Jersey, Ron Wyden, D-Oregon, and Dick Durbin, D-Illinois, are tackling the issue head-on by demanding a level playing field for women and people of color. They are pressing the government to enforce a section of a seven-year-old law that's supposed to do it, but has stalled over the last few years, leaving women and minorities more than a day late and a dollar short.
As first reported by Bustle, the Senators are making a new push to force banks to keep track of their loans and to make stats on their lending habits publicly available. By having this data, they say it will be easier to recognize how women and people of color are systemically pushed out of the lending market, and then, change the system.
Women routinely receive less start-up funding than companies founded by men and women together, and less than companies founded entirely by men.
In a letter to the Director of the Consumer and Financial Protection Bureau, Richard Cordray, the Senators' press for the implementation of "long-overdue transparency measures" outlined in Section 1071 of the landmark Dodd-Frank financial reform legislation as quickly as possible. They say speedy enforcement will "shine a light on the barriers that women, minority, and other entrepreneurs face in accessing capital."
"When small businesses grow and succeed, we create more jobs and an economy that benefits all Americans, regardless of their personal and economic backgrounds."
In the years since The Great Recession, small business loans have been in high demand, making dollars from both the Small Business Administration and private banks scarce and sought after. In a telling data point, businesses owned by women routinely receive less start-up funding than companies founded by men and women together, and less than companies founded entirely by men.
A section of the Dodd-Frank financial reform legislation passed in Congress during the Obama Administration required lending institutions to collect data on lending practices with the hope of figuring out why, exactly, women and minority-owned businesses receive less startup capital than average, and why they often start with less than half the funding of their white male peers. Advocates saw that piece of the landmark financial reform legislation, Section 1071, as something of an insurance policy against a widening gap in the demographics of small business lending, and by extension, ownership.
With a Republican majority in both chambers of Congress, lawmakers from the right see a clear path toward undoing many of the reforms ushered in during the Obama era, though some — including health care reform — have proven "more complicated" than anticipated. As Republicans turn their attention toward dismantling the financial reforms enshrined through Dodd-Frank, Section 1071 is on the chopping block, spurring the trio of Democratic senators to put renewed focus on the issue now.
Kate Bahn, an economist at CAP and the organization's lead researcher on a report released last fall, pointed to lending practices as a major reason why women and people of color fall behind their peers when it comes to small business creation:
If you have less wealth, it’s much harder to start a business, not only because it’s hard to finance your own business, but also because you don’t have collateral to get other business financing.
In May, the Consumer Finance Protection Bureau opened a public comment period on Section 1071. The Senators' ask of the Bureau's Director is simple: wrap it up and "move with speed" toward implementing the rule "under a definite timeline."
After all, time is money, as the saying goes.